Law Firms Misrepresented Attorney Involvement in Cases of Medical Debt
The firms were ordered by the Consumer Financial Protection Bureau to refund hundreds of dollars to consumers
The Consumer Financial Protection Bureau (CFPB) has charged two medical debt collection law firms as well as their president with falsely claiming that letters and calls were from attorneys trying to collect on a debt when, in reality, the accounts had not yet been reviewed by an attorney.
In addition, the firms did not make sure that the consumer information they provided to credit reporting companies was accurate, and they also used affidavits in lawsuits against consumers that were not notarized properly. Thousands of people were affected by these practices.
The CFPB has ordered Works and Lentz, Inc., Works and Lentz of Tulsa, Inc., and their president, Harry A. Lentz, Jr., to provide $577,135 in relief to consumers harmed by their practices, correct those practices, and pay a penalty of $78,800.
"Misrepresenting that a lawyer is involved in a debt collection action gives the collection a false weight," said CFPB Director Richard Cordray. "Works and Lentz intimidated consumers with unfounded threats of potential lawsuits. Today we are putting a stop to that and getting consumers the relief they deserve."
Works and Lentz, Inc. and Works and Lentz of Tulsa, Inc., are debt collection law firms that mainly collect medical-related debts on the behalf of hospitals, doctors, and other healthcare providers in Oklahoma. Every year, they try to collect roughly 700,000 debts that total more than $500 million. They collect on accounts that have become delinquent, and the amount they are paid depends on how much money they collect.
The CFPB found that the two firms undertook illegal debt collection practices. The agency's order charges them with breaking the Fair Debt Collection Practices Act and the Fair Credit Reporting Act from January 2012 to August 2016. Specifically, it found that the firms did the following:
- Sent collection letters that implied a lawyer had sent them. Works and Lentz wrote and sent letters on special letterhead including a signature block that contained the digital signature of a single attorney. The words "Attorney at Law" were printed under the block. Some letters threatened to sue people who did not make payments on their debts. However, in reality, no accounts had been reviewed by an attorney, nor had an attorney decided whether or not a lawsuit would be appropriate before the letters were sent.
- Called victims and implied that a lawyer was involved in the situation. Debt collectors made calls to consumers in which they told them that they were calling from a law firm. This gave victims the impression that attorneys had at least taken part in the decision to make such calls, but in reality, no attorney had reviewed victims' accounts before the collectors made the calls.
- Falsified the notarization of affidavits in lawsuits filed against consumers. Before the firms would file a lawsuit against a consumer, it would solicit signed and notarized affidavits from its clients. These affidavits included information about the client and the debt owed. In some cases, clients provided signed affidavits with a signature that had not been notarized. In these instances, firm employees notarized the documents without verifying the truth of the signatures and then used them in the lawsuits.
- Provided information to a credit reporting company without having policies in place to make sure the information was accurate. The firms provided information for more than one million consumers to a credit reporting company. However, until July 1, 2016, they did not have any written policies or procedures for doing so, nor did they have any protocols in place to make sure that this information was accurate and sound.
The Dodd-Frank Wall Street Reform and Consumer Protection Act gives the CFPB the authority to take action against any institution that breaks federal consumer financial laws. As a result of their violation of the Fair Debt Collections Practices Act and the Fair Credit Reporting Act, the CFPB has ordered the firms and their president to do as follows:
- Refund harmed consumers $577,135. Works and Lentz will refund consumers who paid because they got letters threatening a lawsuit and misrepresenting the involvement of an attorney in reviewing their debts.
- Stop using deceptive language in letters and collection calls. In all letters and calls to consumers whose accounts have not been reviewed by an attorney, the firms will make it clear that no attorney has been involved. In addition, they will accurately identify either the identity or the job title of the person responsible for sending the letter or making the call. Finally, they will remove the name of any attorney as well as the phrase "Attorney at Law" from the signature block of collection letters.
- Prohibit unlawful affidavit notarization. Firm employees cannot illegally notarize affidavits about consumers.
- Revise and enhance protections for consumer credit reporting. The firms have to revise and improve their written policies and procedures related to the accuracy and soundness of consumer-related information that they provide to credit reporting companies.
- Pay $78,800 in a civil money penalty. The two firms will pay $78,800 into the CFPB's Civil Penalty Fund as a consequence of their illegal actions.